On-Premises vs. Cloud Enterprise Software
November 15, 2019

Discussing the benefits and shortcomings of both models for deploying an enterprise software solution.

By MediSolution’s Sales and Marketing Team

When it comes to choosing enterprise software, organizations have the option of using on-premises or cloud-based solutions. In this article, we will briefly describe both options and discuss the benefits and shortcomings of one versus the other.


During the dawn of enterprise computing, investment was driven by organizations, which developed proprietary software that ran on large mainframe computers. Information was distributed to terminals following a query generated by the user.

This architecture is similar to what is happening today with an on-premises software solution. An organization owns and operates a data centre – which usually comprises servers, storage, and networking equipment – and all enterprise software resides on it. Users interact with enterprise software applications using personal computers that run client versions of the software. All information resides within the organization’s own hardware and software infrastructure and it is located in an area controlled by the organization.


When using a cloud-based software solution, the organization outsources the operating of the enterprise software solution. The software runs on a data centre that is neither owned nor controlled by the organization. All infrastructure – servers, storage, and networking – is owned and controlled by the cloud software provider.

Users within the organization, use the software through a client application that resides in their personal computers. This client application may be web-based, and accessed through a web browser, or not.

Therefore, the major difference between a cloud and an on-premises software solution is that the organization’s information resides in either the cloud software provider’s data centre or the organization’s.

Public and Private Cloud

If large enough, an organization may choose to be its own cloud-software-solution provider. This means that information will reside within the organization’s data centre and it will be distributed to users through client applications, web-based or not.

The organization’s IT team may choose to follow this model if they think that the data will be safer within the organization’s own infrastructure, but they would like users to enjoy the agility of a cloud application. In addition, this model, which is called a private cloud, provides the option for users to use the application when they are away from the office and outside the organization’s local area network (LAN).

Pros and Cons of an On-Premises software solution vs a Cloud-Based one


  • The organization has complete control over the information it owns
  • The level of security can be as high as the organization wishes it to be
  • Access to and use of the software relies on the organization’s network which is more reliable than the internet
  • An on-premises software solution can be more easily customized, in whole or in part, according to the organization’s needs and operations
  • On-premises solutions are usually more mature and offer more features than cloud solutions
  • Also, on-premises solutions tend to be more reliable than cloud applications


  • The organization bears the cost of building and operating its own data centre
  • Traditionally, fees for an on-premises software solution are not subscription-based and their upfront licencing fees may bear a significant expense on an organization’s budget
  • Implementation costs for an on-premises software solution are usually higher
  • For organizations with many temporary positions, cloud solutions offer more flexibility in regards to pricing.

On-Premises Software with Flexible Pricing

Many of the shortcomings of an on-premises software solution may be overcome by adopting flexible pricing and billing.

For organizations that want to enjoy the reliability, customization, security and control offered by an on-premises software solution, many on-premises software vendors support flexible pricing and billing. Options for monthly or quarterly payments of upfront fees can help alleviate the financial burden from an organization’s software budget. That way, teams may still enjoy all the benefits of a tried and trusted on-premises software solution, without the heavy lifting of a big initial cost.


Although cloud offers flexibility in regards to the use and billing of an enterprise software solution, many organizations may choose the security, customization, and reliability of an on-premises offering. When flexible pricing is available, on-premises software presents an attractive opportunity, suitable for many organizations that have increased sensitivity in regards to control, security and reliability.